Hodes v. U.S. Department of Treasury

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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SCOTT HODES, )
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Plaintiff, )
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v. ) Civil Action No. 12-1435 (ABJ)
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U.S. DEPARTMENT OF TREASURY, )
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Defendant. )
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MEMORANDUM OPINION
Plaintiff Scott Hodes brings this lawsuit against defendant United States Department of
Treasury, Financial Management Service (“FMS”), alleging that FMS violated the Freedom of
Information Act (“FOIA”), 5 U.S.C. § 552, by failing to respond adequately to his requests for
documents. Compl. ¶¶ 23–25 [Dkt. # 1]. Plaintiff seeks declaratory relief and an injunction
compelling FMS to release the documents sought. Id. at 7. The parties have filed cross-motions
for summary judgment. See Pl.’s Mot. for Summ. J. [Dkt. # 14] (“Pl.’s Mot.”); Def.’s Mot. for
Summ. J. [Dkt. # 13] (“Def.’s Mot.”). The Court will grant summary judgment in favor of
plaintiff because FMS has not met its burden to establish that the materials withheld are exempt
from disclosure.
FOIA provides that the duty to disclose government records to requesters “does not apply
to matters that are . . . specifically exempted from disclosure by a statute” that leaves the agency
with no discretion on the matter. 5 U.S.C. § 552(b)(3)(A)(i). Here, plaintiff seeks the names of
unsuccessful bidders for a particular set of government contracts, Compl. ¶ 11; Pl.’s Mem. in
Supp. of Pl.’s Mot. (“Pl.’s Mem.”) [Dkt. # 14-2] at 1, and the government has identified
41 U.S.C. § 4702, the prohibition against the release of contractor proposals, as the statute that
supplies the basis for the claimed exemption, Def.’s Mem. in Support of Def.’s Mot. (“Def.’s
Mem.”) [Dkt. # 13-1] at 2; see also Compl. ¶ 14. So the narrow question before the Court is
whether bidders’ names are covered by this ban on an agency’s disclosure of “proposals,” and
the Court concludes that they are not.
I. BACKGROUND
Plaintiff Scott Hodes, a Maryland citizen, “is an attorney licensed to practice in the state
of Maryland and the District of Columbia.” Compl. ¶ 4. FMS is a component of defendant
Department of Treasury, a federal agency. Id. ¶ 5. On March 7, 2012, plaintiff submitted a
FOIA request for information regarding RFP TFMS-HQ-06-Q-011, a government contract for
debt collection services. Id. ¶ 11; Solicitation/Contract/Order for Commercial Item, Ex. A to
Compl.; Pl.’s Mem.at 3. Specifically, plaintiff sought:
1. The complete request for proposal;
2. Any and all addendums issued for the request for proposal;
3. Any and all documents answering vendors questions of the request for
proposal;
4. Documents including but not limited to spreadsheets and e-mails
showing how many companies submitted offers and which companies
submitted offers;
5. Documents including but not limited to spreadsheets and e-mails
showing pricing submitted by all companies that submitted offers;
6. Documents including but not limited to e-mails showing how and why
selected vendor(s) were awarded;
7. Any rankings showing how the government ranked various interested
parties to the contract; and
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8. A copy of the task order contract or similar document signed with the
selected vendor(s).
Compl. ¶ 11.
On “April 5, 2012, the FMS responded to plaintiff’s FOIA request” by letter. Id. ¶ 12.
FMS stated that plaintiff’s inquiry into RFP TFMS-HQ-06-Q-011 also concerned four other
government contracts. Id. FMS released certain documents but withheld others, citing
Exemption 3 and Exemption 4 of FOIA. Id.; see also 5 U.S.C. § 552(b)(3)–(4). On April 17,
2012, plaintiff filed an administrative appeal. Compl. ¶ 13. Specifically, plaintiff challenged
FMS’s conclusion that the identities of unsuccessful contract bidders and the pricing information
of the winning proposals were exempt from disclosure. Id.; see also Pl. Appeal Letter, Ex. 4 to
Def.’s Mot. at 2.
In its response to plaintiff’s appeal, on May 31, 2012, FMS refined its position and
released additional information. Compl. ¶ 14; Appeal Decision Letter (“Appeal Decision”), Ex.
2 to Def.’s Mot. However, FMS affirmed its decision to withhold the identities of the
unsuccessful bidders contained in the Award Decision Document as well as the requested pricing
information. Compl. ¶ 14; Appeal Decision at 2. FMS informed plaintiff of his right to judicial
review of FMS’s determination. Appeal Decision at 3. FMS also stated that plaintiff could
alternatively engage the Office of Government Information Services (“OGIS”) to resolve his
dispute with FMS. Id. Plaintiff chose the latter route. Compl. ¶ 15.
By letter dated June 13, 2012, plaintiff sought OGIS’s assistance to obtain the release of
information FMS declared exempt from FOIA. Id. “By letter dated August 8, 2012, OGIS
explained that FMS [could] continue to withhold the information.” Id. ¶ 16. OGIS stated that
FMS had “consulted with the Office of Information Policy . . . at the Department of Justice,
which did not disagree with [FMS’s] interpretation” and application of FOIA Exemptions 3 and
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4 to the relevant statute at issue. Id. ¶ 17 (internal quotation marks omitted); see also 41 U.S.C.
§ 4702.
After fully exhausting his administrative remedies under FOIA, plaintiff filed a complaint
in this Court seeking judicial review of FMS’s decision to withhold records revealing the
identities of the unsuccessful bidders for five debt collection contracts as well as the pricing
information submitted by the successful bidders. Compl. at 7. On January 3, 2013, FMS moved
for summary judgment, arguing that 41 U.S.C. § 4702(b) is a FOIA Exemption 3 statute that
offered FMS no discretion to disclose any information regarding unsuccessful bid proposals for
the sought debt collection services contracts. Def.’s Mem. at 4. But FMS acknowledged that it
erred in not releasing the successful bidders’ pricing information, because section 4702(c)
mandates disclosure of any proposals “incorporated by reference” into the ultimate contract. Id.;
see also 41 U.S.C. § 4702(c). Subsequently, FMS released the requested pricing information of
the winning bidders, but redacted the names of the unsuccessful bidders. See Award Decision
Doc., Ex. 3 to Def.’s Mot.
On January 17, 2013, plaintiff responded and filed a cross-motion for summary
judgment. He argues that (1) FMS has not met its burden to show that the disclosure of the
requested information is barred by the prohibition on the dissemination of “proposals” set forth
in 41 U.S.C. § 4702 and, alternatively, (2) that even if FMS’s interpretation of section 4702(a)
was correct, FMS had knowledge of the unsuccessful bidders’ identities through means other
than the submitted proposals themselves. Pl.’s Mem. at 3–7.
II. STANDARD OF REVIEW
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
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56(a). The party seeking summary judgment bears the “initial responsibility of informing the
district court of the basis for its motion, and identifying those portions of the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks omitted). To defeat
summary judgment, the non-moving party must “designate specific facts showing that there is a
genuine issue for trial.” Id. at 324 (internal quotation marks omitted). The existence of a factual
dispute is insufficient to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247–48 (1986). A dispute is “genuine” only if a reasonable fact-finder could find for the
non-moving party; a fact is only “material” if it is capable of affecting the outcome of the
litigation. Id. at 248; Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C. Cir. 1987). In
assessing a party’s motion, the court must “view the facts and draw reasonable inferences ‘in the
light most favorable to the party opposing the summary judgment motion.’” Scott v. Harris, 550
U.S. 372, 378 (2007) (alteration omitted), quoting United States v. Diebold, Inc., 369 U.S. 654,
655 (1962) (per curiam).
“The rule governing cross-motions for summary judgment . . . is that neither party waives
the right to a full trial on the merits by filing its own motion; each side concedes that no material
facts are at issue only for the purposes of its own motion.” Sherwood v. Wash. Post, 871 F.2d
1144, 1147 n.4 (D.C. Cir. 1989) (alteration in original), quoting McKenzie v. Sawyer, 684 F.2d
62, 68 n.3 (D.C. Cir. 1982). In assessing each party’s motion, “[a]ll underlying facts and
inferences are analyzed in the light most favorable to the non-moving party.” N.S. ex rel. Stein v.
District of Columbia, 709 F. Supp. 2d 57, 65 (D.D.C. 2010), citing Anderson, 477 U.S. at 247.
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III. ANALYSIS
The purpose of FOIA is to achieve the broad disclosure of government records. CIA v.
Sims, 471 U.S. 159, 166 (1985). The disclosure requirement established by the statute is subject
to nine enumerated exemptions. Wolf v. CIA, 473 F.3d 370, 374 (D.C. Cir. 2007), citing
5 U.S.C. § 552(b). These exemptions represent “a balance struck by Congress between the
public’s right to know and the government’s legitimate interest in keeping certain information
confidential.” Ctr. for Nat’l Sec. Studies v. DOJ, 331 F.3d 918, 925 (D.C. Cir. 2003), citing John
Doe Agency v. John Doe Corp., 493 U.S. 146, 152 (1989). But in light of FOIA’s broad
disclosure mandate, the Supreme Court has “consistently stated that FOIA exemptions are to be
narrowly construed.” DOJ v. Julian, 486 U.S. 1, 8 (1988). In accord with this policy, the burden
is placed on the agency when it seeks to withhold requested information. 5 U.S.C. §
552(a)(4)(B); Dep’t of State v. Ray, 502 U.S. 164, 173 (1991).
In the present case, FMS has withheld the identities of unsuccessful bidders to multiple
government procurement contracts under 5 U.S.C. 552(b)(3), commonly referred to as
Exemption 3. Def.’s Mem. at 4; see also, e.g., Larson v. Dep’t of State, 565 F.3d 857, 861 (D.C.
Cir. 2009). Exemption 3 allows an agency to withhold information that is “specifically
exempted from disclosure by statute,” but only if the statute either leaves the agency with no
discretion or “establishes particular criteria for withholding or refers to particular types of
matters to be withheld.” 5 U.S.C. § 552(b)(3)(A)(i)–(ii).
The statute at issue in this case is 41 U.S.C. § 4702, which specifically regulates the
release of government contract proposals in response to FOIA requests. Section 4702(b) states
that “[a] proposal in the possession or control of an executive agency may not be made available
to any person under section 552 of title 5.” 41 U.S.C. § 4702(b). A “proposal” is defined as “a
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proposal, including a technical, management, or cost proposal, submitted by a contractor in
response to the requirements of a solicitation for a competitive proposal.” Id. § 4702(a). 1
In Hornbostel v. Department of the Interior, the court deemed section 4702(b)’s
predecessor, 41 U.S.C. § 253b(m)(1), to be an Exemption 3 statute because it accords an agency
no discretion to disseminate “proposals” in its possession or control. 305 F. Supp. 2d 21, 29–30
(D.D.C. 2003). Both plaintiff and FMS agree that Exemption 3 applies here. See Def.’s Mem. at
4; see also Pl.’s Resp. to Def.’s Counter Statement of Material Facts [Dkt. # 21-1] ¶¶ 1–2.
However, the parties disagree over the breadth and application of the statutory language.
FMS argues that the term “proposal” in 41 U.S.C. § 4207 includes the identities of
unsuccessful bidders and therefore bars their disclosure. Def.’s Mem. at 5. Plaintiff contends
that the definition of proposal set out in 41 U.S.C. § 4702(a) is silent on the question, and he
submits that it is, at best, ambiguous. Pl.’s Mem. at 6. The Court finds that the text of the statute
does not compel FMS’s interpretation and that adopting the broad reading advanced by the
agency here would be contrary to the purpose underlying FOIA and the requirement that
exemptions be construed narrowly.
“The plain meaning of legislation should be conclusive, except in the rare cases [in
which] the literal application of a statute will produce a result demonstrably at odds with the
intentions of its drafters.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989)
(alteration in original), quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982)
(internal quotation marks omitted). Here, the statute does not directly address the question, but it
1 Section 4702(c) provides that the prohibition to disclosure in subsection (b) “does not
apply to a proposal that is set forth or incorporated by reference in a contract entered into
between the agency and the contractor that submitted the proposal.” 41 U.S.C. § 4702(c). So the
prohibition applies to the proposals of unsuccessful bidders, not to proposals of successful
bidders that are incorporated into a contract with the agency.
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does define “proposal” to mean “a proposal, including a technical, management, or cost
proposal, submitted by a contractor in response to the requirements of a solicitation for a
competitive proposal.” 41 U.S.C. § 4702(a) (emphasis added). Defining the “proposal” as an
item “submitted by” the contractor implicitly differentiates the document from the bidding party.
The clause elaborating on the definition to explain that the term “proposal”’ includes technical,
management, or cost proposals and the fact that the clause is set off from “submitted by a
contractor” with a comma, further suggests that the term refers to what is being submitted rather
than who it is submitted by. In other words, the phrase “submitted by a contractor” is meant to
modify the word “proposal.”
This is consistent with the case cited by FMS, Ctr. for Pub. Integrity v. Dep’t of Energy,
191 F. Supp. 2d 187 (D.D.C. 2002), which held that 41 U.S.C. § 4702(b) did not apply to sales
contracts, but only to records of a procurement, because the term “proposal” in the statute was
limited by the phrase “submitted by a contractor.” Id. at 192. FMS attempts to read the case as
standing for the proposition that any record related to a procurement must be covered by the
provision, but the opinion does not go that far. The court did not purport to define the scope of
the word “proposal,” and it focused instead on the use of the word “contractor.” See id. at 192–
93.
The legislative history of section 4702 provides some assistance in resolving the dispute
here. The House Report on the National Defense Authorization Act for Fiscal Year 1997, in
which the provision was first introduced, states:
This section would exempt contractor proposals provided to the federal
government from release under the Freedom of Information Act . . . . The
committee is aware that the current [FOIA] process imposes a significant
administrative burden on federal agencies receiving requests for release of
contractor proposals even though most if not all of the information is
exempt under the FOIA process. This provision is intended to allow
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federal agencies to dispense with the lengthy line-by-line reviews which
are presently required to arrive at the non-disclosure determination for this
material.
Comm. on Nat’l Sec., National Defense Authorization Act for Fiscal Year 1997, H.R. Rep. No.
104-563, at 327 (1996). Thus, the provision was not intended to implement a broad legislative
intent to keep any information associated with bid proposals secret; rather, the goal was simply
to carve out the physical proposals themselves from the FOIA process given the likelihood that
that they would be largely redacted in any event. Id.; see also 5 U.S.C. § 552(b)(4) (exempting
“trade secrets and commercial or financial information obtained from person and privileged or
confidential”). But here, the information sought is not material that would have been otherwise
exempt, and the disclosure of just the names of unsuccessful bidders would not enable parties to
gain access to proprietary cost or technical information.
FMS further argues it is not required to produce the unsuccessful bidders’ names because
it does not have that information in its control. Def.’s Reply and Mem. in Support of Mot. for
Summ. J. and Opp. to Pl.’s Cross-Mot. for Summ. J. [Dkt. # 18] at 3. It is true that FOIA does
not “impose[ ] [any] duty on the agency to create records,” ACLU v. DOJ, 655 F.3d 1, 4 n.3
(D.C. Cir. 2011) (alteration in original), quoting Forsham v. Harris, 455 U.S. 169, 186 (1980)
(internal quotation marks omitted), but only requires the disclosure of “agency records
improperly withheld,” 5 U.S.C. § 552(a)(4)(B). And it is also true that section 4702 bars the
disclosure of contractor submissions in their entirety. But to the extent FMS is in possession of
other documents containing the requested information – such as the redacted attachment to
defendant’s motion for summary judgment, see Award Decision Doc. – it is required to produce
those responsive records in unredacted form.
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CONCLUSION
For the reasons set forth above, the Court will grant plaintiff Scott Hodes’s cross-motion
for summary judgment and deny defendant FMS’s motion for summary judgment. A separate
order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: September 25, 2013
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